Liver fibrosis, a common scarring response to chronic liver injury, is a precursor to cirrhosis and liver cancer. Here, we identified signal transducer and activator of transcription 1 (STAT1) as an important negative regulator in liver fibrosis. Our findings show that disruption of the STAT1 gene accelerated liver fibrosis and hepatic stellate cell (HSC) proliferation in an in vivo model of carbon tetrachloride (CCl4)-induced liver fibrosis. In vitro treatment with IFN-γ inhibited proliferation and activation of wild-type HSCs, but not STAT1−/− HSCs. Moreover, compared to wild-type cells, cellular proliferation stimulated by serum or platelet-derived growth factor (PDGF) was enhanced and accelerated in STAT1−/− HSCs, which was partially mediated via elevated PDGF receptor β expression on such cells. Polyinosinic-polycytidylic acid (poly I:C) or IFN-γ treatment inhibited liver fibrosis in wild-type mice but not in STAT1−/− mice. Induction of NK cell killing of activated HSCs by poly I:C was attenuated in STAT1−/− mice compared to wild-type mice, which was likely due to reduced NKG2D and TRAIL expression on STAT1−/− NK cells. Finally, activation of TGF-β/Smad3 signaling pathway was accelerated, whereas induction of Smad7 was diminished in the liver of STAT1−/− mice after CCl4 administration compared to wild-type mice. In conclusion, activation of STAT1 attenuates liver fibrosis through inhibition of HSC proliferation, attenuation of TGF-β signaling, and stimulation of NK cell killing of activated HSCs. STAT1 could be a new therapeutic target for treating liver fibrosis. (HEPATOLOGY 2006;44:1441–1451.)